It was announced this week that to ensure that the company hits its diversity and inclusion targets BT (British Telecom) was to reduce staff and move many jobs from rural districts to city centres. But will these changes have a positive or negative effect on customers and how will BT know? This follows a pattern of a number of large companies and organisations virtue signalling their alignment with fashionable ideas of diversity and inclusion undergoing organisational changes that neither improve efficiency or profitability but which often have a negative effect on the customer who ultimately provide the financial income.
“Change” is the only constant. Whether considering the states of the universe, weather patterns, or ecological systems, all are in a state of continuous change and development where even the rate of change changes, creating very dynamic systems.
Business and commerce generally are similarly dynamic in their evolution and change. New market opportunities arise as others decline, resulting from the continual alteration and development of customer’s needs and desires, driven by fashion, economics and technology.
Businesses must therefore modify and develop their organizations, to match their capabilities with customer requirements, in a cost effective manner to maximize their profits.
The objective of every business is to continually produce and maximize profits for the long-term benefit of owners, staff and customers. For the manager of commercial operations, the objective is to maximize profitable income, sustainable for the long term while minimizing costs and the use of assets. But in order to achieve this, business may need to adapt their organization and operations in order to maintain and increase their profitable income.
More often than not, organizational change in businesses is driven by a perceived need to cut costs, often usually resulting from reduced profit. But profits come from income, so reorganising to cut costs may not be the answer when failures in customer satisfaction, a decline in demand or increased competitor activity may be the underlying cause.
While recognising that business organizations need to change and develop, to meet the changing circumstances and conditions of their markets, it is important to understand that the way such changes are made may have far reaching and unforeseen consequences.
Before embarking on change it is therefore important to establish why it should be necessary, what it is intended to achieve, and how it will benefit the organization. Is the requirement for radical process or evolutionary development? Experience shows that evolutionary development is generally more effective than the radical answer, which should rarely be used and almost as a last resort, as it frequently produces confusion, inefficiency and demoralization.
Changes in organization and operations are intended to produce consequences which may be, more efficient, cheaper, cost effective and ultimately more profitable business.
However, the most important consideration is how such changes will affect the customer.
It should be remembered that alterations to a business’s operations and organization may be disadvantageous to the customer, which in a competitive market may result in reduced demand and thus reduced income. At the same time, any change in a business organization and operation may provide opportunities to increase market penetration and increase income. Any adverse effects on customers and their demand resulting from changes to a business’s organization and operations must be avoided or minimised. Therefore, before commencing structural or operational change, Commercial managers need to ask:
- How will this change affect the customers?
- Will the customers perceive the change as beneficial or detrimental to them?
- What will be the positive consequences of the change?
- What will be the negative consequences of the change?
- Can the results of the changes be quantified?
- If not quantifiable how are the benefits to be measured?
- How much will the changes cost in time and money?
- Who will benefit from the changes?
Only when these questions have been satisfactorily answered should organizational and operational changes be considered. When they are, the objectives should be clearly understood and ideally the results should be quantifiable. “Best practice” suggests that as far as possible, staff should be encouraged to suggest where changes and improvements can be made, as they are often better placed to know how these may be made and more likely to implement them successfully.
Change and development are essential if businesses are to continue to prosper for their long –term future. But change and development must not be made at the expense of the customer, and as far as possible, should aim to increase customer satisfaction in order to maintain and increase profitable income.
While companies need to make profit to justify their existence, they make it by providing products and services that the customers want to buy. When companies make changes that are perceived by the customer to have adverse effect on the product or service they seek, they will go elsewhere and take their money with them.
© N.C.Watkis, Contract Marketing Service 27 Sep 23